Nevada Touts Data Centers as Key to Revival

Nevada officials want your data to stay in Vegas. Or perhaps Reno, or other areas of the state, which is touting data centers as a growth sector as it seeks to diversify its economy. That effort, built atop the success of the SuperNAP in Las Vegas, has gained momentum from Apple's decision to build a huge server farm near Reno.

The huge power spine at the SuperNAP, Switch's 400,000 square foot data center in Las Vegas.

Nevada officials want your data to stay in Vegas. Or perhaps Reno, or other areas of the state, which is touting data centers as a growth sector as it seeks to diversify its economy. That effort, built atop the success of the SuperNAP in Las Vegas, has gained momentum from Apple's decision to build a huge server farm near Reno.

The Las Vegas tourism business was hit hard by the economic crisis of 2008, as businesses and consumers cut back on spending. That had a ripple effect that impacted hotels, casinos and the construction market. Looking for options to diversify the state's economy, Nevada economic development officials focused on a home-grown company that was quietly creating an electronic empire in Las Vegas.

Switch began building a series of colocation centers in Las Vegas in 2000, and in 2008 unveiled the SuperNAP, its 400,000 square foot vision for the future of high-density computing. In 2011 the company announced plans for a huge expansion to its Las Vegas operations.

National News Notices

Nevada officials' embrace of Switch, which was highlighted by CBS Evening News and The Economist in January, has been one factor in the bustling activity on the state's data center scene. "Nevada now points to Switch as the model of the kind of businesses it wants to attract,” noted CBS correspondent Anthony Mason. Six months later, that's exactly what happened, when Apple chose the Reno Technology Park for its next $1 billion data center project.

"For a state eager to boost its tech chops, the Apple and NJVC projects, combined with Switch Communications’ large data center in southern Nevada and the addition of two new data center projects at the Tahoe Reno Industrial Center, represent much-needed progress," the Reno Gazette-Journal noted in a piece this past weekend. "Now, the state’s recent success has some people hopeful it could kickstart Nevada’s entry as a serious player in the data center industry."

Here's a look at the data center industry activity in Nevada over the past year:

Apple: In June the maker of iPads and iPods announced plans to invest $1 billion over 10 years to build a center at a new technology park near Reno, Nevada. The data center project is part of a development plan in which the company will also build a purchasing center in downtown Reno.

Switch: In October 2011 Switch began work on two facilities that will add 600,000 square feet of space to its SuperNAP campus in south Las Vegas. In December the company announced plans for a new data center campus in northern Las Vegas that will feature another 300,000 square feet of data center facilities.

NJVC: This defense IT specialist opened a 20,000 square foot data center in Reno, Nevada, adding 8,000 square feet of raised floor space to support its cloud and data center solutions. Nevada Governor Brian Sandoval participated in a ribbon-cutting ceremony at the data center located in the Reno Tahoe Technology Park.

ViaWest: The managed hosting company is both building and buying in Las Vegas. Last week ViaWest said it would acquire a CoreLink data center in downtown Las Vegas, doubling the company’s capacity in that market. In May, ViaWest announced it had leased a facility to build a 10 megawatt data center in North Las Vegas.

Pair Networks: Last summer this Pittsburgh-based web hosting company broke ground on a data center project in Las Vegas that will be powered by a combination of an on-site cogeneration plant and a rooftop array of solar panels, using the power grid only for backup power. “Once it’s up and running, it should be the most efficient data center in the world,” said Tim Gaichas, executive vice president of business development for Pair.

Cobalt Data Centers: Last year this new company acquired 2.4 acres in Las Vegas and announced plans invest $60 million to build a colocation center on the property. The Cobalt Sahara Data Center will be a 60,000 square foot facility on East Sahara Road.

How much do data centers developments boost the local economy? Many communities are eager to attract data center projects, but struggle to define the economic benefits of these facilities. Jobs have always been the primary benchmark by which economic development projects are measured. Incentive packages offered by state and local governments are often based on the number of full-time jobs created by a new business.

This model doesn’t work out well for data centers, which are typically highly automated, allowing a small number of workers to operate a large facility. A new data center can bring a large capital investment into a town, but create a much smaller number of jobs than a factory or office property of a similar size.

Some local officials like this scenario, since data center projects can attract a large ratable without adding significant traffic or large numbers of children to the local school system – two areas where large new businesses can create costs and headaches for municipalities. Others are less comfortable offering incentives to companies for buildings that will house electronics rather than people.